The Quebec government has tabled legislation meant to discourage consumer debt.
The legislation includes a prescribed minimum monthly payment consumers must pay on their credit card balances, new disclosure requirements and powers for the courts to modify credit contract terms and conditions on behalf of consumers.
Neil Mohindra, the director of the Centre for Financial Policy Studies at the Fraser Institute, said that the legislation would result in a less competitive market for Quebec since it is provincial and credit card issuers would choose to avoid Quebec, according to the Montreal Gazette.
The court provision, Mohindra said, would encourage consumers to take on more debt rather than the opposite, the Montreal Gazette reports.
Mohindra compared the legislation to the U.S. CARD Act, which he said made “winners” out of people with good credit history but “losers” for those who did not spend enough on their cards in a specific length of time.
“Many individuals with weak credit history will look to more expensive sources of credit, such as pawnshops, to cover high minimum payments rather than change their consumption habits,” Mohindra said, according to the Montreal Gazette, adding that the the U.S. saw a surge in its payday lending industry after similar regulatory reforms were implemented.